National Bank of Georgia v. Moore

• Decision Date: 28 September 1981
• Docket Number: No. 62343,62343
• Citation: 159 Ga.App. 729,285 S.E.2d 78
• Parties: NATIONAL BANK OF GEORGIA v. MOORE et al.
• Court: Georgia Court of Appeals

Page 78

285 S.E.2d 78

159 Ga.App. 729

NATIONAL BANK OF GEORGIA v. MOORE et al.

No. 62343.

Court of Appeals of Georgia.

Sept. 28, 1981.

Donald J. Goodman, Robert S. Wayne, Atlanta, for appellant.

E. A. Simpson, Jr., Gary M. Cooper, Jerome C. Ware, Atlanta, for appellees.

McMURRAY, Presiding Judge.

On a date prior to July 25, 1978, George A. Chaby, an associate of Paul Moore & Associates, approached The National Bank of Georgia to obtain a loan in the amount of $29,500 in order to finance the purchase of a residence in Marietta, Georgia. The bank considered Chaby a bad credit risk and refused to make the requested loan to Chaby unless Paul K. Moore co-signed any promissory note executed by Chaby. On July 25, 1978, the bank made a loan of $29,500 to Chaby, the loan instrument being co-signed by Paul K. Moore; but all the proceeds of the loan in question were delivered to Chaby for his use, Moore receiving no portion of same. A deed to secure debt covering property owned by Chaby and located at a certain address at Statesboro, Georgia was also executed pledging or delivering to the holder (the bank) the property as security for the loan.

The note in question had as one of its terms and conditions that "no party to this instrument shall be discharged from his obligations or undertakings ... should the Holder release or agree not to sue any person against whom the party has, to the knowledge of the Holder, a right of recourse or ... agree to suspend the right to enforce this note, or Holder's interest in the collateral against such person or otherwise discharge such person ... should the Holder extend in whole or in part the time for payment of this note, or exchange, substitute, compromise or surrender entirely any collateral now or hereafter held. No covenant or condition of this note can be waived except upon the written consent of Holder. No duty or failure on the part of the Holder in the exercise of any right or remedy shall operate as a waiver thereof and no single or partial exercise by the Holder of any rights or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy." This particular paragraph of the terms and conditions also stated that forbearance or indulgence by the bank in any regard whatsoever "shall not constitute a waiver of the covenant or condition to be performed by the undersigned to which the same may apply, and, until complete performance by the undersigned of said covenant or condition, Holder shall be entitled to invoke any remedy available to Holder under this note or by law or in equity despite said forbearance or indulgence." The note in question was thereafter renewed on October 23, 1978, and again on January 22, 1979.

On about June 25, 1979, the said note was declared due and in default pursuant to a demand letter written to Chaby with a copy of same to Paul Moore. Following receipt of this demand letter Moore's legal counsel forwarded a letter to the bank dated July 13, 1979, pursuant to Code § 103-205 demanding that the bank proceed to collect the balance due on the note from Chaby, the principal, fully complying with the Code section with reference to the proper notice and advising that if the bank failed to commence an action against Chaby to collect the balance due "within three months from the receipt of this letter, Paul K. Moore will consider any obligation he might have to you to be discharged." There followed considerable correspondence and telephone calls by and between the bank's legal counsel and Moore's legal counsel as to how to proceed against Chaby to collect the indebtedness. One alternative was to proceed against the collateral (the house in Statesboro) and dispose of it in order to pay the indebtedness, the bank trying to cooperate with Moore who was an excellent customer. Thereafter, foreclosure proceedings against the real property were begun, and at the same time Chaby was making an effort to sell the property and requested the bank to allow the house to be sold for $46,000 with the bank settling its claim in full for the equity (a first lien being due another lender in the amount of approximately $24,000). On October 4, 1979, Chaby so advised counsel for the bank that his real estate agent had a cash deal offer of $46,000, approximately $24,000 being due the holder of the first mortgage and $1,800 as real estate agent's sales commission and desired that the bank settle for the balance of equity. The bank, by and through its counsel, refused to accept the balance of the equity (approximately $18,500), advising Chaby that the property was presently being advertised for a foreclosure sale on the first Tuesday in November 1979, and unless the property was sold by Chaby prior to that date on terms acceptable to the bank the property would be foreclosed, the equity in the Statesboro property would not be accepted in full satisfaction of the indebtedness and in the event a payment schedule was not worked out regarding the balance owing, a law suit would be filed against Chaby in the amount of his indebtedness.

Chaby sold the property on or about October 17, 1979, to another and paid the balance of the sale ($18,552.38) to the bank which was applied to his indebtedness. In the meantime, by telephone conversations between counsel for Moore and counsel for the bank, the above information with reference to the sale by Chaby was being communicated, counsel for the bank advising Moore's counsel that if Moore did not want the Statesboro property sold he should pay off the indebtedness.

The bank's counsel contends that after receipt of the proceeds of the sale the balance due and owing by Chaby was "$13,264.39 principal, $810.72 interest through May 23, 1980, accruing at the rate of $3.80 per day from and including May 24, 1980, and 15% of the principal and interest as attorneys' fees." From that time until January 1980 there were numerous telephone calls between counsel for Moore and counsel for the bank with reference to the balance due from Chaby. However, no agreement was reached, and suit was filed in DeKalb County in February of 1980 jointly against Moore, a resident of DeKalb County, and Chaby of Cobb County, to be served by second original, seeking the balance owing on the indebtedness.

Defendant Chaby answered, in general denying the claim. Defendant Moore answered, in general, also denying the claim with defenses of failure of consideration, mutual mistake of fact and law with respect to the transaction, his discharge from any obligation because of plaintiff's refusal to bring suit against Chaby after proper notice, a failure to mitigate damages as far as practicable by the use of ordinary care and diligence, the increase of the risk of liability to this defendant, and accord and satisfaction between the parties, admitting only that Exhibit "A" to plaintiff's complaint is "a promissory note executed by George A. Chaby" (which was the...